Analysts give Procter Gamble, the consumer products firm, an equity beta of 0 65 The risk free rate is 4 0 percent An analyst calculates an equity cost of capital for the firm of 7 9 percent using the capital asset pricing model (CAPM) 'What market risk premium is she assuming ...

Analysts give Procter & Gamble, the consumer products firm, an equity beta of 0.65.The risk-free rate is

Question:

Analysts give Procter & Gamble, the consumer products firm, an equity beta of 0.65.The risk-free rate is 4.0 percent. An analyst calculates an equity for the firm of 7.9 percent using the (CAPM). 'What market risk premium is she assuming?

Capital Asset Pricing Model
The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks. The CAPM is a model for pricing an individual security or portfolio. For individual securities, we make use of the security market line (SML) and its... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...